Rising prices spark a new gold rush in Peruvian Amazon

The price of gold has drawn miners to Madre de Dios, a department of southeastern Peru. But deforestation and use of mercury in the mining have created and environmental hazard for the surrounding rainforest. The Peruvian government is trying to crack down, but enforcement is difficult in the vast jungle of the Amazon.

PUERTO MALDONADO, PERU -- Boriam Valera has seen his future. It shimmers -- and sells for more than $1,100 an ounce.

The tousled 30-year-old works a homemade gold-mining dredge along the banks of the Tambopata River, a tributary of the Amazon, keeping watch over a sluice box that catches gold flecks in the slurry sucked up from the river bottom.

The price of gold has increased 50 percent in the past two years and tripled over the past five, as global investors look to hedge against a falling dollar. Gold hit historic highs this month. That surge has spurred a new Amazon gold rush, with illegal miners pouring into the region and setting up camp along riverbanks, highways and footpaths reaching deep into the rain forest of the Peruvian Amazon.

The influx threatens to overwhelm the region, which is home to some of the Amazon's most valuable nature reserves, several indigenous groups thought to have had no outside contact, and more bird and butterfly species than anywhere else on the planet. Giant swaths of forest are gone, rivers have been diverted, and mercury used to separate gold from sediment has begun to poison downstream communities. Mining has turned an area the size of Washington into muddy wasteland and threatens an area at least 10 times that large.

Perhaps nowhere else in the Amazon is the clash between mining's economic promise and its environmental and health threats more stark than here in the state of Madre de Dios, where more than 30,000 people depend on the industry to make a living and at least 95 percent of miners operate illegally. Peru is the world's fifth-largest gold producer, and the government estimates that 40 percent of that gold is illegally mined.

The government stopped issuing permits this year, in an effort to stanch the flow of men, machines and mercury into this frontier state. Still, they keep coming.

Peru's environment minister, Antonio Brack Egg, has suspended new concessions to mining companies. Late last month, he came to Puerto Maldonado to propose creating mining exclusion zones that would cover 90 percent of the region, eliminating all dredge mining because of mercury-related health concerns and regulating mercury sales more tightly.

"We'll enforce our laws by whatever means are necessary," he said in an interview in Lima before his visit, "even if we have to bring in the army to do it."

A sinking shantytown

The gold-mining industry is literally burying the shantytown of Huepetuhe, as silt dredged upstream from the ever-widening riverbed washes into the town, creeping higher and higher with each rainy season. It has consumed the entire first floor of many of the rickety brothels that front the river, with the tops of door frames peeking up just above the ground, as if to testify to what has sunk in the sludge.

Once a camp for miners like Valera, Huepetuhe sprung up along the river's edge about 30 years ago, when word first spread through poor Andean communities that beneath the dense jungle, the Amazon's soil was flecked with gold. After several decades of growth, gold is now mined here with earthmovers and other heavy equipment, and miners "wash" the naked land with pressure hoses until it erodes into landslides of sludge. The surrounding area appears in satellite photos as a sprawling white scar, running south along a ruined river.

The community perched atop these riches sees little of them; there is little government presence, no sewage system and sporadic electricity. There are a few, dim streetlights; after dark, much of the light comes from mining lights, powered by diesel generators, twinkling across the valley.

"This is where the airport used to be," said resident Liliana Ojeta, 26, as she stood at the edge of an eroding plateau. The family that controlled the land opened it to mining about three years ago, around the time that gold prices began to climb in earnest. Pressure hoses ate away at the runway; all that remains is a shuttered building that appears to have once served as a terminal.